The “Luck” and “Randomness” of Index Funds
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Video: Quants! You’re NOT Measuring VALUE and Nelson’s Theory of Universal Value
President of Investment Research Brian Nelson defines the concept of universal value and shows how quantitative statistical methods are inextricably linked to those of fundamental, financial, business-model related analysis. Value does not exist in respective process vacuums! Value is universal. Find out why. Running time: ~10 minutes. Tickerized for Valuentum’s stock and ETF coverage universe. Transcript Hi this is Brian Nelson from Valuentum Securities, and this is the tenth edition of a series that I call “Off the Cuff,” where I get in front of the camera and I talk for ten minutes. This is what we have to talk about today. We have to talk about this concept: The Theory of Universal Value. Value does not exist in vacuums … Read more
First Harvey, Now Irma
Image Source: NASA Goddard Space Flight Center. NASA Sees Irma Strengthen to a Category 5 Hurricane. This visible light image of Hurricane Irma was captured by NOAA’s GOES East satellite as it strengthened to a Category 5 hurricane in the Central Atlantic Ocean on Sept. 5 at 7:45 a.m. EDT (1145 UTC). NASA and NOAA satellites have been providing valuable satellite imagery to forecasters at the National Hurricane Center, and revealed that Hurricane Irma has strengthened to a Category 5 hurricane on Sept. 5 around 8 a.m. EDT (1200 UTC). Credits: NASA/NOAA GOES Project. Hurricane season 2017 has not been kind to insurers. By Brian Nelson, CFA What a disaster-of-a-hurricane-season 2017 is shaping up to be. Our hearts and thoughts go out to … Read more
Business Models of Garbage Haulers “Hitting on All Cylinders”
Image Source: Waste Connections In a sign of the health of the US economy, garbage haulers are experiencing rates of top-line growth not witnessed in years, but their earnings multiples reflect share prices that may be disconnected from normalized fundamentals. No matter how much we love their business models, we’ve already “cashed in” our chips. By Brian Nelson, CFA Industry economics in the municipal solid waste industry are generally easy to understand. Industry pricing power essentially emanates from disposal operations. Waste generated, for example, must end up somewhere, and therefore whichever entity has the disposal operations has the power to set the bar with respect to pricing, directly or indirectly, from transfer facilities all the way through collections within certain … Read more
Valuentum’s 3 Breakthroughs in the Field of Finance and More
Valuentum’s President Brian Nelson pauses for a picture before speaking at the CFA Society of Houston in March 2017. By Valuentum Editorial Staff Let’s cover Valuentum’s 3 major breakthroughs in the field of finance. The first one is big and may challenge you to rethink everything you think you know about investing. 1. On a logical framework, Valuentum has debunked John C. Bogle’s landmark syllogism that has paved the way for the concept of index investing. Index investing has been built on a logical shortcoming, whether supported by evidence or not. We think it is important that the investment community know of this. Read (pdf): The “Luck” and “Randomness” of Index Funds (2018), Brian Nelson, CFA See video documentation: /FALLACY_of_Index_Funds To … Read more
Trash As A Source of Cash and 2 New Additions to the Best Ideas Newsletter Portfolio
Image Source: thetaxhaven We’re making a number of adjustments to the Best Ideas Newsletter portfolio. By Kris Rosemann and Brian Nelson, CFA It’s time to take out the trash… that is, trash hauler Republic Services (RSG) from the Best Ideas Newsletter portfolio (it’s not “trash” – it’s actually a fantastic company and has been a great stock, but boy is it pricey now). We’re also adding ~1.5% positions in two new ideas, Dollar General (DG) and Verint Systems (VRNT), in the Best Ideas Newsletter portfolio as both have attractive valuations, in our view. Dollar General’s 27 consecutive years of same-store-sales growth are impressive, and Verint is now at the low end of its short-term uptrend, offering an interesting entry point … Read more
Commodity Prices Affect Waste Industry Performance
Waste industry economics are relatively easy to understand. Municipal solid waste has to end up somewhere, and therefore whoever has the most diverse disposal operations can set the bar with respect to pricing, which impacts tipping fees and the economics of transfer facilities and collection operations. After all, garbage pick-up operators won’t be in business for long if they pay more to dispose of waste than they charge to pick it up. We view disposal operations as having oligopolistic tendencies, even if collection operations face some of the most intense pricing competition of any industry. As for the players, Waste Management (WM) and Republic Services (RSG) have the largest disposal operations in the US. At the end of 2014, Waste … Read more
Not Throwing Away This Garbage Hauler
It may not be a glamourous business but it is a good one. Pricing emanates from disposal operations – that’s what industry experts say. Waste has to go somewhere, and therefore whoever has the disposal operations sets the bar with respect to pricing from transfer facilities all the way through collections. After all, garbage pick-up operators won’t be in business for long if they pay more to dispose of waste than they charge to pick it up. Industry economics in the waste industry are relatively easy to understand. As for the players, Waste Management (WM) and Republic Services (RSG) have the largest disposal operations in the US. At the end of 2014, Waste Management owned or operated 252 landfill sites, the largest … Read more
Republic Services Looks to Strong 2015
Best Ideas portfolio holding Republic Services (RSG) is a dominant player in the US non-hazardous solid-waste services industry. For those that may not be as familiar with the trash taker, the company is a powerful force within the industry thanks to its significant landfill ownership, the value of which continues to increase over time due to a variety of structural factors from citizen’s group opposition (Not-In-My-Back-Yard) to increasing regulatory and environmental hurdles. Waste Management (WM) and Waste Connections (WCN) round out the solid-waste industry’s oligopolistic, landfill ownership structure. During the fourth quarter, results released February 12, Republic Services generated annual revenue of $2.23 billion, up 3.9%, and exceeded consensus expectations by a couple pennies per share on an adjusted basis. … Read more
Dividend Increases for the Week Ending October 24
Let’s take a look at dividend increases for the week ending October 24.